Does time-space compression affect analyst forecast performance?

Despite the increasing attention given to the time-space compression effect brought by improved transportation, the economic consequences, especially those on analyst forecast performance, have yet to be explored. Based on difference-in-difference model designs and a sample of China's stock markets, we find robust empirical evidence that high-speed railway connections have a significantly positive effect on analyst forecast performance from various perspectives. We further conduct counterfactual analyses to examine the underlying mechanism and analyse the influence of high-speed railway connections on analysts' stock recommendations. This study contributes to the influencing factors for sell-side analyst performance and the effect of geographic proximity on information efficiency.